Full implementation of rank-dependent prizes

1 Department of Economics, Faculty of Social Sciences, Københavns Universitet2 Department of Economics, Faculty of Social Sciences, Københavns Universitet

DOI:

10.1016/j.econlet.2013.02.028

Abstract:

A manager/mechanism designer must allocate a set of money prizes ($1,$2,…,$n) between n agents working in a team. The agents know the state, i.e., who contributed most, second most, etc. The agents’ preferences over prizes are state independent. We incorporate the possibility that the manager knows the state with a tiny probability and present a simple mechanism that uniquely awards prizes that respect the true state.